Aldi is overhauling its stores to win the grocery wars - and it's coming straight for Walmart and Kroger

Business Insider/Hayley Peterson

Aldi is adding tons of new products to its stores.

• Aldi is adding more fresh, organic, vegetarian, and vegan items to its US stores in what will be the biggest product refresh in its history.
• Once the product rollout is complete in early 2019, about 20% of the items in Aldi's stores will be new.
• Some of those items include veggie noodles, sliced fruits, organic chicken breasts, and pre-marinated meats, as well as grab-and-go items, such as single-serve guacamole and hummus, salad bowls, and quinoa bowls.
• Aldi is making the change in the midst of massive upheaval in the US grocery industry, with new players like Lidl, Aldi's biggest global competitor, entering the US market, and Amazon's purchase of Whole Foods.
• "The grocery industry is in a perfect storm with consumers changing their shopping habits, different formats taking away market share from the traditional supermarket, and supermarkets defending their share with price wars," Aldi CEO Jason Hart told Business Insider.

Aldi is making big changes to its stores.

The discount grocer is embarking on the biggest product refresh in its history by bringing more fresh, organic, vegetarian, and vegan items to its 1,800 stores across the US.

The changes will be hard to miss; once the product rollout is complete in early 2019, about 20% of the items in Aldi's stores will be new.

The new products will be rolled out in all aisles of Aldi's stores, but shoppers will see the biggest difference in the fresh department, which includes perishables like meat, dairy, and cheese.

"Customers want more products that are healthier for you, that are fresher, that are more convenient, that are more organic in nature, that come from a clear ingredient deck," Aldi US CEO Jason Hart told Business Insider. "As demand has been exponential in all those categories, we've had to re-merchandise the stores."

Business Insider/Hayley Peterson

The new items include veggie noodles, sliced fruits, organic chicken breasts, and pre-marinated meats, as well as grab-and-go items, like single-serve guacamole and hummus, salad bowls, and quinoa bowls.

Aldi's private-label Earth Grown line, which features vegetarian and vegan options, is also adding new items including kale-and-quinoa crunch burgers and chicken-less patties.

Aldi's overall selection of fresh foods will expand by 40% with the changes.

The German-based company, which is known globally for its rock-bottom prices and simple, no-frills shopping experience, is overhauling and expanding its product selection in the midst of a $5.3 billion investment in its US stores.

Business Insider/Hayley Peterson

Aldi is spending $1.9 billion to remodel existing stores and another $3.4 billion to build 800 new stores over the next four years.

The store growth has put the privately-held company on track to become the third-largest grocer in the US behind Walmart and Kroger by 2022, in terms of store count.

"Aldi is clicking on all cylinders lately," Hart said. "We've doubled sales in the last five years and we've got plans to double sales over the next five years."

Aldi CEO says the grocery industry is in a 'perfect storm'

Aldi's announcement on its product overhaul comes 13 months after Lidl - which is Aldi's biggest global competitor - entered the US market. It also comes one year after Amazon acquired Whole Foods and immediately started lowering prices at the grocery chain.

Hart said that this latest move isn't a response to Lidl's entry into the US market, however. He also denied the notion that Whole Foods is a bigger threat to Aldi now that it's owned by Amazon.

Aldi competes more directly with traditional supermarkets, he said. Companies that fall into this camp include Walmart and Kroger, the top two grocers in the US.

Business Insider/Hayley Peterson

"We think we have a better model than the traditional supermarket when it comes to saving consumers, most importantly, money… but also time, having a simpler easier way to shop for groceries," he said. "We have a consciously reduced, carefully selected range of products that covers almost all the consumer's needs on their grocery list in about a fifth of the size of what a traditional supermarket has."

Aldi stores are about 12,000 square feet, compared to Walmart stores, which range between 100,000 to 180,000 square feet - and Kroger stores, which are about 80,000 square feet, on average.

While Aldi is closely watching its competitors, Hart says the company is even more focused on shoppers.

"The grocery industry is in a perfect storm with consumers changing their shopping habits, different formats taking away market share from the traditional supermarket, and supermarkets defending their share with price wars," Hart said. "While we focus on our competition and we keep an eye on them … we're more focused on the consumer, our customers, and the customers that don't shop us, so we can communicate to them that Aldi is a better way to shop."